London regains top spot in global rent league

London's West End business district has regained its title as the world's most costly office lettings market, replacing Tokyo's Inner Central District as Britain's recession-led rental declines ease, research shows.

The survey of global office rents from property consultant CB Richard Ellis showed average West End rents at $185 per square foot, compared with $172 per square foot in Tokyo's Inner Central District and $139 per square foot in that city's Outer Circle market, the third-placed market in the rankings.

Hong Kong's Central Business District and Moscow came in fourth and fifth with rents of $137.61 and $131.55 in the semi-annual report, which tracks office occupancy costs around the globe.

'While there are signs that commercial real estate values are stabilising in some markets in Asia and parts of London, underlying property fundamentals are still weak,' said Raymond Torto, Global Chief Economist at CB Richard Ellis.

'However the office market may be on the cusp of moving from 'intensive care' to the 'recovery' stage, the first step to getting back to good health,' he said.

Prime office occupancy costs of the 179 markets monitored revealed a collective drop of 7.7% worldwide over the year to the end of September in local currency terms.

Some 131 markets experienced an annual decline while nearly 50 markets registered double-digit percentage-point drops in office rents year-over-year. Several of the world's financial hubs top the list of the year's biggest rental fallers.

These include Singapore, which fell 53% to $63.89 and Midtown New York, where rents plunged by almost 30% to $68.93, taking the district to 24th in the rankings.

Emerging markets have also been hit hard. Abu Dhabi office rents have tumbled nearly 39% to $84.40 while Kiev, Ukraine, led the world with the largest year-on-year decrease in office occupancy costs, falling 65% from the same time last year.

According to the report, 41 markets across the world experienced positive rental growth. Aberdeen in Scotland and Rio de Janeiro in Brazil both grew by more than 10%, showing not all markets have been equally affected by slowing demand for office space.